Today’s world changes fast, and organizations need to be agile to keep up. They need to respond to market fluctuations more quickly, but also to predict changes before they happen. In our Decode the Future event highlights video, we explore how real-time access to the latest data and predictive analytics can shape your decision-making and lead to ‘a-ha’ moments.
When Netflix spent $100 million to launch the U.S. version of House of Cards in 2011, they predicted it would be a hit. How? Customer data showed that people who watched the UK version of House of Cards also watched David Fincher films — so he was brought in to develop the U.S. remake. As expected, the show transformed Netflix into a global leader almost overnight and became the streaming giant’s most-watched series, with 86% of subscribers saying they were less likely to cancel their subscription after watching it.
This type of premeditated decision-making, using data-led predictive analytics to shape strategies in real-time, may have seemed unique a decade ago. But in 2021 and beyond, predictive analysis will be critical for brands looking to maximize their ROI (return on investment) and remain competitive. While the numbers attest (the average ROI for enterprises using business intelligence and analytics is 1,300%), driving this type of transformation often requires a new strategic focus.
At GfK, we believe that the path to future-proofing your business starts by combining instinct with AI-powered predictive analytics — leading to more 'a-ha moments' you can act on, shaping decision-making, and empowering you and your team to decode the future. It also gives you the confidence you need to move at speed in a competitive market.
Here we share our perspective on how business leaders can discover valuable insights to shape their strategy and — most importantly — help them to understand when, why, and how to act.
There’s an art to decision-making. And while using data to validate (or invalidate) assumptions is a key element of any informed decision, intuition can often provide leaders with a compelling starting point.
“We understand our brand and our business, so going with our instinct is where we begin,” says GfK CMO Gonzalo Garcia Villanueva. “But then this instinct must be validated with in-depth customer data. The art is balancing human experience with data science, resulting in knowledge at speed.”
Getting this combination of the art and science of decision-making right may seem elusive, but the best place to begin the process is by going back to basics. Start by understanding the key business questions that need answering. This can arise from the details of a yearly operating plan, a particularly striking wave of customer feedback, or even wider market trends. Then, with the use of AI, vast amounts of relevant data on the topic can be layered in to identify trends or anomalies.
Having these actionable predictive analytics in hand, weeks or even months before human-led research would materialize, allows businesses to quickly unlock important details that can deliver a major impact.
For instance, before investing in a new store, Starbucks taps into local data — including income levels, age, traffic, and even nearby landmarks such as offices or universities — regarding a potential location of interest. This data is then used to create an AI forecasting model of what the revenues and profits of that store might look like, as well as the potential impact it might have on existing revenues from nearby Starbucks outlets. Instead of taking a guess as to the ideal next location, Starbucks executives are then able to make more informed decisions based on real data.
Businesses that are succeeding in today’s difficult climate have made bold changes, not minor adjustments.
“Navigating the way ahead — whether it's next week, or next year and beyond — means businesses must quickly rethink what they do, who they are, and where they fit into this changed and still-changing world,” says Garcia Villanueva.
Using data, however, is integral to mitigating the risk these bold moves can present. The right insight delivered at the right time can even reveal opportunities to pivot or expand beyond traditional core offerings.
Sharp, for example, used predictive analytics to get to the bottom of a suspected hunch — that people were printing less than they used to — and completely reorient its business to where the market was headed. “Issues that arise at a customer level can sometimes begin to paint a picture of a strategic change,” says Stuart Sykes, managing director at Sharp UK. “We wanted to understand at a granular product level how we would be impacted versus other brands.”
By analyzing data to assess and plot the decline in printing, Sykes spotted an opportunity for Sharp to move into the managed IT Services sector, which is now a key area for Sharp. “Sometimes organizations feel that data and metrics are there for the strategic decisions, but we use it equally to enhance our service and performance at the customer level,” he says.
There are many companies that lacked the data and foresight to transform their footprint in the way Sharp did, and subsequently went the way of the dinosaur. But in Sharp’s case, the bold move helped spur their bottom line — after an 18-month decline, their stock price is up 33% over the last two years.
Actionable insights are meaningless without the knowledge of when and how to act on them.
Lindsay Herbert, the author of Digital Transformation and chair of our upcoming Decode the Future virtual event, recommends using design thinking and ‘agile’ methodologies to help businesses put these learnings to task as early on in the process as possible.
Both of these techniques can be used to help businesses define what direction to go with their newfound insights from predictive analytics. Design thinking encourages companies to take an iterative approach to product design, creating quick, low-cost prototypes that can be tested with users to inform whether an idea is worth further investment. And agile, similarly, involves creating an MVP (minimum viable product) that is ‘complete and testable’ on a small scale before gaining additional insights through user testing.
These approaches, while traditionally used in product design settings, hold the potential to help multiple teams across a business enhance their ways of working and continually test new strategies. That way, the cycle of gathering data to make actionable change is expedited and allows teams to assess where the real opportunity lies.
By enhancing our gut feelings with data, making bold decisions to stay ahead of market demand, and using an agile iteration process, you have the ability to outpace change. “The unexpected is only a challenge when you cannot predict the speed at which it is approaching, and in what combination events are likely to occur,” says Garcia Villanueva.
Discover more ways of working with data and AI to future-proof your business at our free virtual event Decode the Future, marking the launch of gfknewron — a single access point to your brand, market, and consumer intelligence, enhanced with AI foresight and recommendations. Hear from global experts about dynamic new approaches to data and intelligent automation, and how they empower your business to make better decisions, faster.